Keeping Up With Employment Taxes

Whatever your business - if you have employees, you have employment taxes. For each hire, you are required to withhold the employee's federal income tax, FICA, Medicare, along with state income tax and state disability insurance in most states. As the employer, it is your responsibility to make sure these taxes are deposited to the government. Employee taxes are held in trust funds to be deposited by the employer using Form 941.

It's also the employer's duty to match the employee’s FICA and Medicare contribution amounts. All funds are deposited with the US Treasury Department through electronic funds transfer. The schedule of the deposits is dependent on the amount of the liability. Each quarter the taxes are reported to the IRS via the Form 941.

Your company must also pay into the federal and state unemployment funds. The federal rates depend on how much the employee’s pay is each year. Also, each state has different requirements and rates for unemployment taxes.

Failure to deposit taxes on time or mistakes in reporting taxes results in penalties levied by the IRS. It’s very important for companies to be on top of all aspects of their payroll or things can get expensive. If you have questions about your taxes or any employee administration concerns, contact People Lease today at (601) 987-3025.

The Internal Revenue Service has released guidance for employers before the law provision requires them to report the cost of health care coverage on employee's W-2 statements.

• Employers who distributed less than 250 W-2s in 2011 are exempt from the requirement until at least 2014 but larger employers will be required to report health care cost information on 2012 W-2s when they are issued in 2013.
• Employers are not required to include dental and vision care in computing employee's health care costs if those plans are separate from group medical plans.
• Employers may choose to report only the cost of coverage of terminated employees.  If they include the coverage cost and the COBRA cost, they must do so consistently for all terminated employees.
• Health care costs do not have to be reported for situations where a W-2 is not required, such as retired employees receiving health care coverage.
• Employers are not required to report health care cost information if a terminated employee requests a W-2 before the end of the year.
• The cost of coverage taxable to employees, like for a domestic partner or a child over 26, must be reported on the W-2.

Other questions have not been answered. Some experts interpret the guidance to mean that employers have the choice to report both the active coverage and retiree coverage for employees who retire during the course of the year. Employers must be consistent in these cases.

The new reporting requirements will add to employer costs and liability. People Lease can help reduce your liability and keep you up to date with reporting requirements. For more information or to receive your free payroll quote contact us at 601.987.3025 or visit www.freepayrollquotes.com.